When is Refinancing Worth it?
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In the market for a mortgage loan? We'll be glad to discuss our mortgage offerings! Give us a call at (207) 571-8034. Ready to get started? Apply Here.
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It has been said that only in the case your new interest will be at least two points under your current rate, should you refinance your mortgage. That might have been true a while back, but with refinancing dropping in cost over the last few years, it's never the wrong time to explore the options of a new mortgage! Refinancing your mortgage loan has some advantages that can make it worth the initial cost a few times over.
Benefits
You could be able to bring down your interest rate (sometimes substantially) and reduce your monthly mortgage payment amount with a refinanced loan. You also could be given the option of pulling out some of the equity in your house by "cashing out" some money to fix up your home, consolidate debt, or take your family on a vacation. With lower rates, you might also get the chance to build up home equity more quickly by changing to a shorter term loan.
The Cost
All these benefits do come with some expense, though. You'll be charged the same sort of fees as you did with your current mortgage loan. Among these will be settlement costs, appraisal fees, lender's title insurance, underwriting fees, and others.
Do the Math
You could offer to pay points (prepaid interest) to gain a more favorable rate of interest. Your savings over the life of the loan could be substantial if you have paid up front about 3% of the new loan total. We recommend that you consult with a tax professional before acting on advice that these paid points can be deducted on your federal income taxes.
Another cost that a borrower might take into account is that a reduced rate of interest will reduce the interest amount you'll deduct from your taxes. We can help you do the math! Call us at (207) 571-8034.
All things considered, for most the amount of up-front costs to refinance are paid back soon in savings each month. We can help you explore your options, considering the effect a refinance might have on your taxes, how likely you might be to sell in the next couple of years, and your money on hand. Call us at (207) 571-8034 to get started.
Want to know more about refinancing? Give us a call: (207) 571-8034.